Bush says he accepts Kerry war claim

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President George Bush has said that he does not believe Senator John Kerry lied about his war record, but he declined to condemn the TV commercial that alleges Senator Kerry came by his war medals dishonestly.

Mr Bush's comments, in a half-hour interview with The New York Times, undercut one of the central accusations of the veterans' group, Swift Boat Veterans for Truth, which paid for the commercial.

The group's unproved attacks on Senator Kerry have dominated the political debate for more than two weeks.

As he prepares for next week's Republican convention, Mr Bush also tried to make peace with Senator John McCain by promising, during a telephone call from Air Force One on Thursday with the senator, to take legal action to stop the contentious ads.

Mr Bush is hoping to head off a public confrontation with the Arizona Republican and Vietnam veteran when he campaigns with the President next week. The Bush campaign said it would go to court to try to force the Federal Election Commission to crack down on the ads.

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Bush campaign chairman Marc Racicot said that while the courts could act quickly, the case could still bog down and have little impact before the November 2 election.

Senator McCain has called on Mr Bush to do more to end the Swift Boat ads, which accuse Senator Kerry, Senator McCain's friend, of lying about his Vietnam War service.

Senator McCain urged Mr Bush to condemn the ads directly. Though Mr Bush has refused to do so, Senator McCain praised his decision to file the lawsuit. The White House made the announcement as Mr Bush emerged from his Texas ranch and started a week of intense campaigning before the convention. Mr Bush kicked off the eight-state sprint with rallies in New Mexico, a state he lost to Democrat Al Gore by just 366 votes in 2000.

He was accompanied for the first time on the campaign by former New York mayor Rudolph Giuliani, a Republican whose response to the September 11 attacks made him a national figure.

Senator McCain is scheduled to join Mr Bush in the battleground state of Iowa on Tuesday and has threatened to raise the Swift Boat issue with the President when they meet. Mr Bush can ill afford to alienate Senator McCain, who is an enormously popular figure within segments of the Republican Party, as well as among independent and swinging voters who may determine the election's outcome.

The Kerry campaign brushed aside the proposed lawsuit, renewing its call on Mr Bush to condemn the ads. "This White House is desperately trying to avoid coming clean about its role in smearing John Kerry's heroic war record," said the Massachusetts senator's campaign spokesman, Phil Singer.

· An extra 1.3 million Americans slipped into poverty last year and another 1.4 million went without health insurance, the US Government reported. It was the third year of bad news in both trends.

Senator Kerry seized on the new numbers as proof that the Administration's economic policies had failed. The Bush campaign countered that the numbers painted an incomplete picture by not including the tax cuts championed by the President.

On health insurance, the Bush campaign claimed that more people were covered now than at the highest point under the Clinton administration. But in a twist that could prove embarrassing to free-market Republicans, census figures showed that the reason for this was the growth in government-provided health coverage. which offset declines in the number covered by employer-provided insurance.